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The brainwashing of America is just about complete, and it will soon be time to rinse and repeat. The latest load of suds to be applied to the task is the announcement that the gross domestic product — the value of all the goods and services produced in the country — grew at a rate of 4.1% during the second quarter of this year. The Industrial Hallelujah Chorus is in full-throated harmony, with every politician and pundit in the land agreeing that this is a very good thing, and competing with each other to invent ever-more-effusive ways to describe the economy — “booming” is just about everybody’s favorite.
The Tweeter in Chief has taken more than 100 per cent credit (as only he can do) for what he described as “amazing,” “historic” numbers. They’re not amazing, they’re not historic, and they’re not really numbers — to call them numbers suggests that they are data, and they are not. What was released Friday was the first guesstimate of a sampling of Wall Street economists of what they thought the economy might have done in the second quarter. Their guesstimates were then averaged, seasonally adjusted, tweaked for inflation, annualized, pasteurized, homogenized, whipped, shaped and polished until the magic number materialized.
To be fair, the official news release from the Commerce Department makes it clear that 4.1% was an “advance estimate…based on source data that are incomplete or subject to further revision” and that a second estimate, based on some but not all the data, will be released in another month. Such revisions continue forever — they just adjusted the numbers for 1929 — and typically change the initial estimate by one percent or more.
None of these qualifications appear in either the narcissistic bloviations of the Tweeter in Chief or in the fawning accounts of the industrial news media. “The economy is doing well,” is how CNN expressed the consensus, “and Trump deserves some credit.” Neither claim stands up to even casual causal analysis.
- The idea that any president of the United States “manages” the world’s largest ($20 trillion) portion of the intertwined globalized economy is as credible as the claim advanced by ancient high priests that they managed the weather. Like the priests of old, modern presidents advance the claim only when times are good. Or can be made to seem good. When times go bad, the pretenders used to get fed to live volcanoes, now they go to work for Goldman Sachs.
- The US economy is by most objective accounts drowning in debt (both personal and government) while profits and wages languish, the stock market is overheated, and a plunge into recession or worse seems imminent.
- The perceived swelling of the GDP numbers in Q2 2018 was largely accounted for by panicked manufacturers stocking up on materials about to be subjected to tariffs by none other than the Tweeter in Chief. His trade war is expected to deflate the GDP numbers in the third quarter.
- And what shall we say about the nearly universal assumption that growth is good, fast growth is better, and growth on this finite planet will go on forever and ever, amen? It’s hard to know what to say other than, “It may not be global warming that fries our bacon, because if it’s not the heat, it’s the stupidity.”
Thanks, Tom, for another timely warning of the approaching storm. Gradually, more people are becoming aware, but the numbers are too small. Collectively, the society is sleep walking, either unwilling or unable to visualize the levels of severity of a collapse of this economy. I have ceased passing articles such as this to my family and friends; there is no response. They are too busy, or don’t want to think about it.
To fully gronk what’s at work here, we need to begin by examining the modern mantra, ‘numbers don’t lie’…The fact is, numbers lie routinely. Like all forms of communication, numbers (or ‘mathematics, if you will) are mere abstract representations of certain tenuous aspects of reality. Numbers provide a way to digest odd configurations of seemingly like things, and to communicate certain ‘facts’ about such things to others who share an understanding of the prevailing number language. This keeps events somewhat orderly, and it all works well enuff…until it doesn’t.
Example: In 1941 my father and three of his close college friends posed for a photo. The pic found its way to the back of a bookshelf where it languished for five decades. At their 50th college reunion the friends met again and had a group picture snapped by a friendly bystander. When my father returned home he chanced upon the ancient photo and was amazed to see that he and his buddies were lined up in the very same order as they had assumed at the reunion. Being a cracker-jack mathematician, he proudly announced that the chances of such a coincidence were slim – no better than one in twenty-three!
I remember explaining to dear old dad – much to his consternation – that, as he and his three compadres were not ping-pong balls in a lottery tub, his computation was next to irrelevant. In fact, the line-up represented a complex subconscious relationship construct, that, more likely than not, would recur in the same order in the event of a future such photo session…all things being equal, of course.
Therein lies the rub – all things are seldom equal. Fuzzy math prevails, and folks are easily bedazzled by slick sales presentations, especially when ‘the numbers add up’.
The media never announces how quickly total debt rises.
It would be enlightening to see the government publish the percentage growth of both GDP and total debt (private as well as public) each quarter. I suppose, though, that would deflate many a windbag attempting to prop up the status quo.